Going Gold

The Digital Pimp

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The rise of the commercial digital distribution model has been as swift as a download of Hexic on a fiber-optic connection. Even Microsoft has been taken by surprise – Xbox Live Arcade, with its original 50MB size limit, was once envisioned as a place for simple Flash-style games. Now we have games like Watchmen: The End is Nigh, all 1.2GB of it and, Watchmen aside, the quality of some of 200-title strong lineup would put many a fully-fledged console to shame.

The signs are everywhere that nearly 15 years after Nintendo first launched the born-too-soon Satellaview service, we’re at last reaching the tipping point for digital distribution. A WiiWare title was one of the top games of 2008 on that machine; every console from the DSi up includes a virtual store of its own for users to download bite-size games. The latest chapter of GTA, perhaps the most popular game in the world right now, comes only in the form of a digital download.

And now, following on from the ” title=”” target=”_blank”>Dave Perry has to say? But whether the next PSP comes with this functionality or not is irrelevant – the day is coming when a console will no longer have any physical media, and for industry insiders it couldn’t come soon enough.

No more hand-carrying gold masters to first party for submission; no more disc recalls when a massive bug slips through the QA process; no more having to split the profits with retail chains, and having to compete for limited shelf space; no more print costs for manuals and packaging.

And perhaps most importantly, an end to the industry’s latest scapegoat, used games.

What’s not to like? For those working in the industry, apart from the special “fondle factor” of holding your completed work in your two hands, nothing.

But hang on just a second. Aren’t we forgetting someone here? Those, erm, whaddya-call-ems. You know, those guys, the… oh yeah… customers.

Digital distribution right now feels like an idea that is being pushed by the industry for the industry’s purposes, a get-out clause for us to escape the aspects of the industry that irritate us, a way to corral the customers into buying through a model of our choosing. If so, we overestimate ourselves. Before we go too far down this road, we had better make sure we have the interests of the people who pay our wages in mind, and I’m far from convinced that anybody involved in this discussion actually does.

The iTunes Store is the figurehead of the digital distribution industry. While still not growing fast enough to make up for the falling sales of CDs, iTunes has succeeded where every other attempt to sell for money what you can get easily for free has failed. It succeeded for the same reason all new technologies succeed – it offered something the public wanted.

Most of iTunes’ unsuccessful rival music sites sought to sign users into all-you-can-listen contracts with monthly fees, never actually selling you any product. iTunes, on the other hand, offered value for money, selling albums for $9.99, cheaper than in stores. What’s more, it allowed the user to cherry-pick individual songs from an album – in effect destroying the very concept of the album which has been the cornerstone of the music industry for 50 years.

Even when it was equipped with DRM, iTunes still allowed you to burn music onto CD at your leisure, give that music to a friend, authorize your music on several (Apple approved) devices at once, and preview every song before you downloaded it. It had, and continues to have, its shortcomings – but its added value to the end user makes up for it.

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To give a slightly different example of a technology that put the customer in front of the industry, consider the TiVo or other DVR devices. This is a device that all but destroys the business model that network TV is built upon by practically eliminating that longtime gripe of the consumer, commercials, and unshackling viewers from the schedules that networks so carefully sought to impose.

The oligopical nature of the games market means that this kind of disruption is unlikely ever to happen. Change, if it is to come at all, will have to happen from within. But comments like those from Didier Malenfant, the CEO of longtime PSP supporters Ready at Dawn, make me doubt that change is ever coming. When asked about the prospect of an all-digital model, he said, “I’d love to see anything that can help distribution move quicker toward a 100 percent online model. It’s not piracy but used games that are killing us”.

Now, I’ve laid out my case against this stillborn logic before, but we need to face up to it: Games are expensive. It doesn’t matter how much value for money – our most loyal customers are children, teenagers and college students who have little disposable income and even less of the concept of delayed reward.

This is not a problem that applies to music, because CDs are (relatively) inexpensive to buy, and their resale value is negligible. But our product costs $60 a pop – and while sometimes you can get hundreds of hours out of that investment, sometimes it’s over after a single weekend.

Whether the industry wants to admit it or not, cash-pressed customers regard games as an investment as well as a purchase. Resale value is factored in, but with digital that value is nonexistent. Any digital games economy that does not take this into account – and makes the mistake of assuming that the average customer regards the price of a game to be $60, when in fact it is $60, minus the potential resale value – is doomed to failure.

What customers are willing to pay to own a physical product and a virtual one are different – not to mention the very real feeling that you never really own a DRM-equipped digital product because in a few years you won’t be able to play it on any technology available.

When it comes to gaming, it’s good to share. Think about how many games you played when you were young, as compared to how many you actually bought. If you’re anything like me, that ratio was probably close to 10:1.

As with used games, this is actually a good thing for the industry in the long term. As a latecomer to the SNES, I did not buy Super Mario World, Mario Kart or Zelda III on the machine – but I’ve bought every single one of those games’ sequels on subsequent consoles.

With digital distribution of games, this goes right out the window. Again, this is a not a problem which applies to iTunes, which allows you to write your music to a CD and pass it to a curious friend, who hopefully goes on to purchase the next album by themselves, and then buy all the concert tickets and merchandise that makes the music industry profitable.

But this too is lost in an all-digital landscape. Microsoft made a very wise move is requiring a demo version of every Xbox Live Arcade game, and of course there are demos for most major titles available on both Live and PSN, but a demo and the full experience are not the same thing, and someone has to pay for that bandwidth, whether it’s through subscription fees or other means.

Some of these problems are inherent to the digital distribution model and cannot be overcome. What we have to do, like Steam and iTunes do to varying degrees of success, is offer a model that provides added value to the customer by making up for the lack of features they are accustomed to. What we absolutely must not do is use digital distribution as a means to cut out the parts of the process we don’t like and keep everything we do.

The success of DLC as a business model, despite all of the high-profile missteps so far, shows that there is at least a part of the userbase that will always be happy to shell out. But DLC is an optional extra that targets the hardcore, those who want more and aren’t afraid to pay for it. A physical media-free console, the one that is coming this year, next year or ten years down the line, must cast a much wider net.

Christian Ward thinks the number one problem we need to solve for digital distribution is the infuriatingly fiddly input system for inputting credit card numbers on a control pad.

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